Proactive Investors reported that Magnetic Resources has completed a conceptual initial financial assessment of the wholly owned Ragged Rock magnetite project in Western Australia indicating a robust economic return.
Critically, it would take advantage of existing rail infrastructure to Kwinana and Albany and could have Opex of between USD 64 per tonne to USD 72 per tonne.
Consulting engineers Engenium examined production scenarios of 1 million tonne per annum and 2 million tonnes per annum of magnetite concentrate using existing rail infrastructure to Kwinana and Albany.
The robust results of the study are driven by the combination of what look to be high quality magnetite deposits which are close to rail infrastructure with likely access to port space.
Albany is the preferred port due to the likelihood of available port space, however the proposed port development of James Point near Kwinana may provide an attractive future option.
For a 1 million tonne per annum operation via Albany Port, key metrics include USD 159 million to USD 179 million capital expenditure; USD 64 per tonne to USD 72 per tonne operating expenditure; a net present value (10%) of USD 331 million to USD 375 million and an internal rate of return of 23% to 25%.
For a 2 million tonne per annum operation via Albany Port, key metrics include USD 294 million to USD 314 million capital expenditure; USD 64 per tonne to USD 72 per tonne operating expenditure; a net present value (10%) of USD 690 million to USD 778 million and an internal rate of return of 26% to 29%.
The study used results from Magnetic's preliminary sampling and Davis Tube Recovery tests which indicate a head grade of 40% iron, a mass recovery of 35%, a concentrate grade of 68% and assumes an exploration target tonnage of 400 million tonne to 450 million tonnes.
Other assumptions used in the study include a strip ratio of 1.0, a price of USD 117 per tonne FoB for 66% iron concentrate, a mine life of 20 years and processing 2.9 million tonne per annum or 5.7 million tonne per annum.
The study assumes mining only a small part of the exploration target outlined to date, ranging from a total of 60 million tonnes to 120 million tonnes.
The logistical study indicates that 2 million tonne per annum of concentrate could be transported on the existing Avon-Albany railway without significant upgrading.
Subject to finalization of land access agreements, Magnetic now plans to complete its program of mapping and surface sampling. This will be followed by ground magnetic surveys to help prioritize a program of reverse circulation drilling to test the most prospective targets.x